EU States Block New Supply Chain Due Diligence Rules

EU member countries this week couldn't agree to new rules requiring companies to conduct specific due diligence on their supply chains to address various environmental and social concerns, including forced labor risks (see 2312150057) and 2202230073).

The bloc needed to secure a “qualified majority” of 15 EU countries representing 65% of the EU population to push the corporate sustainability due diligence directive forward, but it couldn’t reach that threshold during a Feb. 28 vote, the Belgian presidency of the EU Council said in a post on the X platform. Reuters reported that 13 EU members abstained from the vote and one voted against, with Germany’s pro-business Free Democrats political party leading the opposition after arguing the rules would burden German industry.

The failed vote came about three weeks after the bloc postponed the initial vote on the new rules after hearing both Germany and Italy planned to abstain (see 2402120042). If approved by EU member states, the rules would next head to the European Parliament.

The failure to pass the supply chain rules “is a colossal misstep,” said Steve Trent, CEO of the Environmental Justice Foundation. “This crucial law has taken marathon negotiations between 27 Member States, the European Parliament, and the European Commission, so to have it blocked at the eleventh hour primarily by political point scoring by the German minority political party” is “shameful.” He urged EU officials to “find a new compromise within the short time that remains before the end of this parliamentary term” in April.